China’s endorsement of EITI process is to our advantage

Dear Editor,

The China Chamber of Commerce for Mining, Metals and Chemicals – a Chinese Government-affiliated body – recently launched a set of voluntary Guidelines for Chinese mineral companies that operate mining projects outside of China.

The move by China provides an enormous boost for efforts worldwide to bring Governments in line with global transparency standards, in particular the Extractive Industries Transparency Initiative (EITI), the Dodd-Frank Act Section 1504, as well as the European Union (EU) Directives.

Locally, this announcement, reported by Global Witness, a major international monitoring organization, represents an important development with respect to Chinese involvement with the extractive sector in Guyana.

The Guidelines, which are not online yet, were handed out in hard copy at the launch in Beijing by the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters.

The Guidelines for Social Responsibility in Outbound Mining Investments speak directly to the standards expected of companies operating in countries such as Guyana.

With respect, for example, to disclosure of payments made to Governments, the Guidelines state that companies must “disclose all payments which are made to foreign government entities in countries of operation, including in-kind payments and infrastructure projects, in line with global transparency standards, in countries where those apply (FN4)”.

Global Witness noted that “to date, 44 resource-rich countries implement the standard of the EITI, which requires governments to disclose their receipts from mining companies and companies to disclose their payments made to government entities. The figures are reconciled and published in an annual national EITI report, in order to prevent corruption and inform the public about revenues from resource wealth”.

The political significance of China’s endorsement of EITI standards puts considerable pressure on the US to follow suit.

Congressional approval of the Dodd-Frank Act (legislation drafted after the financial crisis of 2008) has been held up by the powerful oil and gas lobby in the US on the grounds that ratification would render them uncompetitive with respect to China. The Chinese move effectively pulls the rug from under this argument.

Along with the announcement from China, the UK also announced its acceptance of candidate status for EITI membership.

The UK EITI, in what Global Witness deemed “a wise move’, is to build into the scheme company reporting on the revenues they have paid for each individual project. Monitoring payments at this level means that money paid for specific projects can be traced through the system into government coffers.

In another related EITI development, the international EITI Board is exploring the terms for what it calls the “enabling environment” for civil society groups to assess whether countries are complying with EITI terms.

This is a central issue to the whole EITI and one of particular interest in Guyana where we have recently adopted a more constructive attitude towards the EITI process.

Without a flow of technical information, free from fear of retaliation towards technical staff of public agencies, the central purpose of this scheme – enabling citizens to use the data to hold their governments to account – will not be effectively secured.

Submitted by

The Executive Committee

Guyana Human Rights Association